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The electronic music duo The Chainsmokers are best known for catchy hits like "Closer" and "Paris," but they have also made a name for themselves as Web3 innovators. The latest example comes with the release of their new album "So Far So Good," which will include a drop of 5,000 NFTs that will let fans share in 1% of the royalties.
This is the most high-profile example to date of musicians using NFTs to share royalties with fans. While artists like Nas and Diplo have issued royalty-generating NFTs tied to specific songs, this is the first time a band has done so for free for an entire album.
"We’re trying to go deeper than wider with our fan base with this new album," said the Chainsmokers' Drew Taggart.
In an interview with Decrypt, Taggart and bandmate Alex Pall explained that they identified their most loyal fans, 5000 of whom will receive an NFT, by analyzing data from concert sales, music streams and Discord activity.
An NFT is unique type of token that is used to demonstrate ownership over a digital asset, such as art, video game items, or music. In this case, the NFTs will entitle Chainsmokers fans to a share of royalties, but also to additional perks like access to a members-only section of The Chainsmokers' Discord channel, and opportunities to meet with the duo directly.
Those who receive the NFTs will receive notifications on a quarterly or semi-annual basis about when they receive a payment. If they choose to sell the NFT, a smart contract (essentially a computer program) will deliver 7.5% of the proceeds to The Chainsmokers (one of the appeals of NFTs for artists is the ability to receive a cut of secondary sales), which the duo says they will donate to the albums' song writers.
The new album drops on Friday and the NFTs will be given out a few days later on May 17. In order to distribute the NFTs, The Chainsmokers are relying on a platform called Royal, which uses the Polygon network, and is behind the recent NFT drops of Nas and other prominent artists.
The Chainsmokers say they have arranged to release the NFTs in a way that doesn't require any crypto knowledge on the part of their fans. While those fans who do know crypto can arrange to receive the NFT directly in their Web3 wallet, novices can ask Royal to create a wallet for them and rely on the site to display and store it.
In order to eliminate friction for fans, the duo has also arranged for them to be able to acquire and transfer the NFTs without any transaction costs.
While this is the first time The Chainsmokers have issued NFTs, they are hardly new to the crypto scene. For years, the duo have operated an investment firm that has backed numerous Web3 projects including Royal, which was founded by another musician, Justin Blau aka DJ 3Lau.
According to Pall, he and Taggart first encountered crypto six years back when they were playing a corporate gig for Google. During a break between sets, a random guy entered their trailer and talked a blue streak about the transformative power of blockchain—an encounter that left them convinced about the technology's potential.
Pall says they saw immediately how an immutable blockchain ledger could facilitate new interactions with their fans, and potentially fix the problem of secondary ticket sales. That problem, which has long frustrated fans and musicians alike, is that scalpers (often using bots) scoop up large blocks of tickets, and resell them for a large profit.
Using NFTs on a blockchain can help bands circumvent the scalpers, and ensure it is they or their fans who receive resale proceeds.
More broadly, The Chainsmokers are among a growing number of artists who have come to recognize that blockchains can provide a superior alternative to traditional business models, which involve layers of lawyers and music industry middlemen.
Blockchain-based record and distribution systems provide musicians with a new way to interact with fans, but also the most reliable system yet for tracking royalties—a longtime pain point in the industry.
For now, NFTs and other blockchain-based technologies are largely unproven for the music industry, a fact which The Chainsmokers are quick to acknowledge. "Everyone’s still figuring this out," says Taggart.
That said, the fast-growing popularity of platforms like Royal, which recently raised $55 million, as well as the ranks of major artists embracing crypto, suggest that Web3 is likely to be the way forward for the music industry.
If that's the case, the NFTs associated with their album will be another coup for The Chainsmokers not only as musicians, but as businessman. The duo's other ventures include a successful brand of tequila.
Asked how they acquired their entrepreneurial streak, the duo cited Jimmy Buffett, noting that the Margaritaville singer has build a business empire by being careful to back those projects that are in keeping with his brand and personality.
Pall also joked that the duo's Web3 ventures could also be useful if his stage appeal should decline. "I'm not going to look good in leather pants forever," he quipped.
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